TOKYO : As the yen plumbs three-decade lows and pressure grows on Japan to intervene or make monetary policy changes, traders figure there is not much Tokyo can do to reverse the currency's slide while interest rates and momentum are heavily skewed against it.
FILE PHOTO: Banknotes of Japanese yen and U.S. dollar are seen in this illustration picture taken September 23, 2022. REUTERS/Florence Lo/File Photo
Japan has sloughed off yield caps and negative interest rates. The central bank has flagged a retreat from the bond market. And still the yen has remained the cheapest major currency to borrow and short-sell - all but sealing its fate. That leaves short-term U.S. rates above 5.25 per cent for longer, while short-term Japanese rates sit at 0.1 per cent, meaning the 22 bp increase priced in for Japan this year hardly moves the dial.
On all fronts investors see the central bank's ability to move or surprise markets as limited, particularly as it already made a landmark exit from negative rates at its meeting in March.
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